Part 2: Statement of Cash Flows (25 marks)

Use the following financial statements and additional information of Milton Inc. to prepare a statement of cash flows for the year ended 31 December 2020, using the indirect method.

Milton Inc.

Balance Sheet

At 31 December

	2020	2019
	$	$
Assets
Cash	176,960	189,200
Accounts Receivable	56,100	65,400
Inventory	150,200	173,400
Prepaid Rent	17,700	15,650
Equipment	142,800	146,000
Accumulated Depreciation Equipment	(89,600)	(98,000)
Building	465,000	320,000
Accumulated Depreciation Building	(90,000)	(75,000)
Total Assets	829,160	736,650
Liabilities and Stockholders Equity
Liabilities
Accounts Payable	102,400	103,450
Unearned Revenue	6,100	8,500
Notes Payable (long-term)	172,500	172,500
Total Liabilities	281,000	284,450
Stockholders Equity
Common Stock	510,000	450,000
Retained Earnings	125,160	57,200
Treasury Stock	(87,000)	(55,000)
Total Stockholders Equity	548,160	452,200
Total Liabilities and Stockholders Equity	829,160	736,650

4

Milton Inc.

Income Statement

For the Year Ended 31 December 2020

$

Revenues	708,000
Cost of goods sold	369,400
Operating expenses	211,200
Gain on sale of equipment	4,400
Tax expense	26,840
Net income	104,960

Additional Information

a. Depreciation expenses of $29,000 was included in operating expenses.

b. An equipment with an original cost of $29,200 (its book value was $6,800) was sold for $11,200 cash.

c. Paid $26,000 for a new equipment.

d. Signed a 10-year promissory note of $145,000 in exchange for building.

g. Repurchased shares of its own common stock by cash.